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May 09, 2008 (Tulsa World - McClatchy-Tribune Information Services via COMTEX) -- Tulsa drivers faced record gasoline prices Thursday as the common price of unleaded fuel jumped to $3.49 a gallon.

Many retailers raised prices a dime overnight Wednesday, following a national trend that shows no sign of slowing even though demand for fuel continues to fall.

Jeff Lenard, a spokesman with the National Association of Convenience Stores, said consumers are responding nationwide to record prices and filling up less.

"Demand is down at stores on a volume basis," Lenard said. "We might be seeing a permanent shift in behavior."

A report by the Energy Information Administration released on Wednesday forecast that demand for petroleum products would fall in the face of high prices by 330,000 barrels per day over the next year.

Inventories of oil and gasoline also rose last week, according to the EIA.

But the news had little effect on prices. Crude oil, which comprises 72 percent of the price paid at the pump, continued to set records this week and gasoline costs responded.

The price

for a gallon of regular-grade gasoline at many of Tulsa's largest retailers rose 10 cents to follow the price of crude oil higher.

The national average price of gasoline also increased, climbing 2.7 cents to $3.645.

Tom Kloza, chief oil analyst for the Oil Price Information Service, said the price will likely continue to rise this weekend due to crude prices, which have nearly doubled during the last 12 months.

Even with the recent increase, retailers still are feeling squeezed at the pump. The wholesale price of gasoline in Tulsa increased Wednesday to $3.49, according to Bloomberg data. On Thursday, it dropped 2 cents, but still was far short of the minimum profit of 10 cents to 12 cents a gallon that most sellers usually seek.

Light, sweet crude for June delivery climbed 16 cents Thursday to close at $123.69 on the New York Mercantile Exchange.

Thursday's closing price marked the fourth consecutive day that oil futures have reached a new highs.

Kloza said the upswing "is probably disheartening to motorists" who've reduced fuel consumption but received no relief at the pump.

He cited increased global demand for petroleum products and investment and speculation in commodities, which have helped drive prices up.

Earlier this week, Goldman Sachs predicted that oil could rise as high as $200 in two years. The prediction seemed to spark investment in the oil market.

"We are at the point where real damage is being done to family budgets," Chuck Mai, a spokesman for AAA-Oklahoma, said.

Mai pointed to the rising fuel costs that may force motor ists to cancel vacation plans or choose destinations that are closer to home.

Meanwhile, Bill Cartwright, general manager for Tulsa Transit, said more and more people are choosing to take a bus to work.

Tulsa Transit has seen ridership increase by 8 percent this fiscal year over the same period a year ago.

"There is a definite strong trend," Cartwright said. "People are looking for mobility options."

Still, Oklahoma remains one of the least-expensive places in the country to fill up, with a statewide average price of $3.49.

The states of South Carolina, Wyoming and Arizona had lower average fuel prices on Thursday, according to AAA and the Oil Price Information Service.

The highest prices were recorded in Alaska, where a gallon of regular grade gasoline costs an average of $3.935.

Jason Womack 581-8380

jason.womack@tulsaworld.com

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Jason Womack

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